When it comes to getting homeowners insurance, there’s no question that you should shop around and get quotes from multiple carriers. As you do this, you’ll probably notice that you get different price quotes, sometimes with substantial differences.
But why is that? If you’ve ever wondered what goes into computing your home insurance premium, you’re not alone. Insurance companies have different methods of calculating their rates, but here are some general factors that go into the equation.
The Size of Your Home
The size of your house has a lot to do with how much insurance companies will charge you. It makes sense, really—the bigger the home, the higher the premium. This is because of the costs associated with rebuilding or repairing a home. In general, a larger home will be more costly to rebuild or repair than a smaller home. More square footage also equals more liability for the insurance company.
The good news here is that this is an area that you can easily control. If you’re on the margins and deciding whether you need to buy a bigger house with those extra bedrooms or not, the higher insurance rates may be an important factor in your decision.
The Quality of Construction
This also goes for more expensive or intricately constructed homes. Homes that are more expensive and higher-end will usually command a higher premium. This is because in the event of a claim the insurance company can expect to pay more to repair to rebuild part of the home.
Conversely, a newer and/or well-constructed home is also less prone to damage, so that may work in your favor. A new, well-constructed home is cheaper to insure, so working with construction experts is always important.
Your Location
According to some sources, where your home is located may be the biggest factor in calculating your home insurance rates. This is because insurance companies take in the environmental factors of a given area and run the probability of how likely a home in these conditions is to get damaged.
Unfortunately, there’s not much you can do about the location factor, short of moving. Areas prone to natural disasters—hurricanes in Florida and wildfires in California, for example—will see higher premiums than other, more standard weather areas.
Computing your home insurance rates has many factors, some of you may be able to control and some of which you can’t, like the location of the house. Either way, no two companies have the same calculation process so it’s always a good idea to shop around for homeowners insurance. There is substantial value in using independent Agencies like Harris Insurance who represent hundreds of markets. One quote request allows you to shop and compare without having to do the work. Let the Harris Insurance Property experts work up quotes for you today!
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LEGAL DISCLAIMER
Views expressed here do not constitute legal advice. The information contained herein is for general guidance of matter only and not for the purpose of providing legal advice. Discussion of insurance policy language is descriptive only. Every policy has different policy language. Coverage afforded under any insurance policy issued is subject to individual policy terms and conditions. Please refer to your policy for the actual language.
